Cathay Forest Products Corp.
TSX VENTURE : CFZ

Cathay Forest Products Corp.

May 01, 2007 08:14 ET

Cathay Forest Announces 2006 Year End Results

TORONTO, ONTARIO--(CCNMatthews - May 1, 2007) - Cathay Forest Products Corp. ("Cathay" or the "Company")(TSX VENTURE:CFZ) today reported its financial results for the year ended December 31, 2006.

The Company reported revenues of $4 million for the year ended December 31, 2006 compared to $50,000 in fiscal 2005. Revenues were primarily derived from sub-concessions of the harvesting of standing timber in southern China and from trading of timber in Russia and northern China. The Company reported a net loss for the 12-month period of $1.9 million or $0.03 loss per share versus a loss of $2.3 million a year earlier or $0.05 loss per share. Management anticipates increasing revenue as it accelerates the harvesting of its standing timber, increases timber trading, and initiates harvesting programs of its fast growth plantations.

"We made great progress on our commercialization strategy this year and we anticipate continued revenue growth from our growing portfolio of forestry activities," said Anthony Ng, Cathay's President and CEO. "Companies with forestry assets in China are positioned extremely well for the growth in demand of wood-based products by China's consumers. We are going to continue pursuing opportunities to acquire forestry assets for sale to the Chinese markets. We also believe we have a compelling strategy to capitalize on ventures with Russian timber partners."

Cathay received sales orders from tendering out harvesting rights on standing timber property in southern China. The revenue from these sub-concessions will be spread out over a period of several months. As this activity increases, Cathay will show a steady revenue stream as it sustainably tenders harvesting rights. The properties in China that relate to this activity are leased by Cathay for an average of 25 years.

Cathay's poplar plantations continue to mature and the first major harvest will occur in 2008. Cathay recently added to its poplar plantation portfolio with the acquisition of property rights at Poyang Lake (see press release dated January 12, 2007).

General and administrative costs for the year were $1.5 million versus $1.8 million a year earlier. Selling and marketing expenses were $0.8 million for the year ended December 31, 2006 versus $0.6 million in fiscal 2005. As operations increase, additional resources have been budgeted for sales and marketing.

In December 2006, the Company completed a broker sponsored financing where it issued 6,030,000 common shares for a gross proceeds of $3.1 million. Subsequently, in January 2007, the Company issued 3,970,000 common shares for a gross proceeds of $2.1 million. At year-end, the Company's cash and equivalents was approximately $5.4 million. Complete financial statements and other related information is accessible through Cathay Forest's profile at www.sedar.com.

About Cathay Forest Products

Cathay Forest is a forest products company managing standing timber properties and developing fast-growth, high-yield poplar plantations in the Peoples Republic of China. Cathay Forest is building a world class forest products company through a customer base that includes the domestic Chinese pulp and paper industry and harvesting customers serving a variety of wood product industries.

All statements, other than statements of historical fact, in this news release are forward-looking statements that involve various risks and uncertainties, including, without limitation, statements regarding the future plans and objectives of the Company. Actual results and future events could differ materially from those anticipated in such statements. The Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy of this release.

Contact Information